Close Close

Life Health > Health Insurance > Health Insurance

PPACA fees to eat 5% of a plan's premiums

Your article was successfully shared with the contacts you provided.

Managers of Harvard Pilgrim Health Care expect fees related to the Patient Protection and Affordable Care Act to amount to about 5 percent of the premiums a new plan will generate.

The company described how PPACA fees might affect costs in a rate filing for a family of new indemnity preferred provider organization plans an affiliate, HPHC Insurance Co. Inc., wants to sell in Connecticut.

The nonprofit, Massachusetts-based carrier hopes to start selling bronze, silver, gold and platinum PPO coverage in Connecticut’s non-exchange small-group market in the third quarter.

HPHC is expecting to charge a base rate of $407.84 per member per month, with $319.08 going to pay claims and $84.67 to pay non-claim expenses. The company hopes to get $4.08 in operating profits per member per month.

Because the plans are new, HPHC cannot show how new PPACA mandates might affect costs.

The company shows that it expects to spend a total of 4.98 percent of premium revenue, or $20.34 per member per month, on PPACA fees, including 2.5 percent on the new PPACA health insurer fee; 1.35 percent on public exchange administrative fees, even though the plan will be sold off-exchange; 1.07 percent on a PPACA reinsurance program fee; 0.04 percent on a PPACA comparative effectiveness research program fee; and 0.02 percent on a PPACA risk-adjustment program user fee.

The company expects agent and broker commissions to amount to 4 percent of premium revenue, or $16.31 per member per month.

See also:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.